THE Scottish Government has admitted for the first time local income tax rates could be varied locally – a major concession to get the proposal through the Scottish Parliament.
Until the weekend, the SNP administration had stuck hard and fast to its proposal to replace the council tax with a fixed, centrally set 3p income tax supplement.
But yesterday John Swinney, the finance secretary, said he was willing to consider allowing councils to vary the rate up to 3p, but not above.
He also confirmed the government was investigating how to tax unearned income. "We're certainly considering that as an option, I'm very happy to confirm that," he said.
No sign that HM Revenue and Customs would be prepared to operate the system for the Scottish administration - which probably means that individual local authorities will have to take on the task of recovering the tax from employers. And employers may need to get used to making differential deductions from their employees' wage packets depending upon which local authority area they reside in. Furthermore, companies which pay dividends may have to learn how to deduct varying amounts of tax from their shareholders.
The words "administrative nightmare" come to mind.
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Those were, of course, the reasons why the SNP proposed a flat rate 3p tax levied on earned income only. But naturally they have to consider the responses to the consultation, particularly when the Labour-led opposition has made such a big issue of those two features of the original proposal.
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